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 With respect to patents, on October 1, 2009, the Third Amendment to China's Patent Law, passed in December 2008, went into effect. While many provisions of the Patent Law were clarified and improved, rights holders have raised a number of concerns about the new law and implementing regulations, including the effect of disclosure of origin requirements on patent validity, inventor remuneration, and the scope of and procedures related to compulsory licensing, among other matters. The United States will closely follow the implementation of these measures in 2010.

The United States encourages China to provide an effective system to expeditiously address patent issues in connection with applications to market pharmaceutical products. Additionally, the United States continues to have concerns about the extent to which China provides effective protection against unfair commercial use, as well as unauthorized disclosure, of undisclosed test or other data generated to obtain marketing approval for pharmaceutical products.

The United States believes that continued bilateral dialogue and cooperation can lead to further progress in these and other areas. The United States will continue to work with China on IPR enforcement and protection strategies, innovation policies, and the range of other important IPR-related matters in our bilateral economic relationship, including through the Joint Commission on Commerce and Trade (JCCT) and other fora.

Provincial and local issues

Progress, or lack thereof, in protecting and enforcing IPR in China can vary greatly by region. For example, industry stakeholders continue to identify Shanghai municipality as a bright spot in China's IPR landscape. Stakeholders hope that additional improvements may result from Shanghai's hosting of the 2010 World Expo. Neighboring Zhejiang province has also shown progress. Zhejiang courts have set an example of transparency by publishing IPR decisions on the Internet. In 2009, Zhejiang undertook more trademark infringement investigations than any other Chinese province, thereby highlighting both the increasing responsiveness of officials to industry requests for enforcement, and the scale of the problem in the province.

Jiangsu province, with its focus on promoting high technology, has demonstrated its recognition of the importance of IPR protection, including through a Suzhou court's criminal sentences in a high-profile software piracy case. However, right holders continue to express frustration at the level and scale of counterfeit manufacturing in Guangzhou province, one of China's largest manufacturing hubs. Enforcement is undermined by inconsistencies with respect to matters such as the valuation methodologies for calculating damages, fines, and penalties. Moreover, fines and penalties are not deterrent and the numbers of criminal IPR cases that are initiated is too low to bring about measurable improvements in the region.